I am writing today about the 5 common money myths. I often hear things said about money that simply aren’t true. Managing finances does not have to be complicated. We tend make it out to be far more difficult than it actually is. I am here to set the record straight on the five common myths about money.
Myth #1. I need to earn a lot to save a lot.
I hear this money myth a lot. You can save money regardless of how much you earn. Open a savings account or multiple ones if you can. Have money transferred automatically to these accounts every time you get paid. Every time you get a pay rise or come into more money, increase your savings rate.
I would recommend you set up a spending account each for you and your spouse. This gives you the freedom to spend it on what you like and allows some financial independence in your relationship. For me personally, we have $35 a fortnight go into my hubby and my account. It’s not a huge amount but it does grow over time. When I get payouts from Cash Rewards and ShopBack from referrals and cash back, I opt to transfer this into my spending account or top up the mortgage.
Pay more to your debt or mortgage than what you are required to (ie above the minimum repayments). Even small amounts extra will add up. You’ll get used to paying more, that soon it will feel normal.
Work hard to build up an emergency savings fund which you can tap into if and when you need to. This takes away the need for credit cards and personal loans. Chances are, if you have money aside, you probably won’t have to use it (Murphy’s law and all). Set yourself an initial goal of $1000, then $2000, $5000, $10,000 and then 3-6 months of expenses to keep you going in case you weren’t able to work. It’s a big amount but you can get there if you keep chipping away at it.
Myth #2. I need to be rich before I can be generous.
This money myth is common and to me, it sounds like an excuse. While yes, you might be able to afford to give more away later, you can start with what you have right now.
Practice being generous with little so you won’t find it hard to be generous with much. If you can’t part with $10 when you earn $100 a week, you’ll find giving $100 or $1000 away tough. Everyone can be generous in some way, even if it is a tiny amount of money and giving more of your time.
Perhaps you could sponsor a child from a developing country. You could write letters as well as contributing financially to build relationship with them. Alternatively you could support a child closer to home by helping them with school supplies, uniforms and fees. You could donate or volunteer at a school breakfast program or soup kitchen. Give money to a homeless shelter or animal rescue.
Marantha Health is a not for profit in Uganda helping to improve health outcomes, and they can always do with more support. Catherine Hamlin Fistula Foundation is another charity close to my heart. They help to save women suffering with preventable childbirth injuries.
Find the thing that makes you tick, makes your heart break or motivates you into action, and give what you can to it. Get in the habit of giving something in whatever season you are in, and increase the amount when you can. Generosity feels good and is good for us! Like gratitude, it is good for our health to practice and enormously benefits those who need it most.
Myth #3. Mortgages last for thirty years.
A big money myth is that mortgages need to last for 30 years. You can pay it off sooner! Change your mindset. Read books, follow inspiring people, listen to motivating podcasts. Get your partner on board and make a plan. I’m most passionate about this myth!
Find a mortgage broker who can help you find the deal best for you (and who understands all the confusing stuff). Look for the lowest interest rate, low fees, perks like offset accounts and the ability to make higher repayments without limits.
Ring up your bank and ask what they can do for you. Question whether they are offering you the best rate on your mortgage. If they play hard ball, threaten to go somewhere else, and follow through if they don’t seem to care (they often find a better deal if they think they will really lose too).
Make weekly or fortnightly repayments on your mortgage Pay more than the minimum. Throw extra at it when you can- tax returns, bonuses, payrises, side hustles, selling unwanted items from your house. Hustle hard and bank the earnings. Just imagine owning your house outright and the money it would free up each pay!
Myth #4. Kids are expensive.
The money myth that kids are expensive is not necessarily true. As parents, you choose how you raise them. I do cloth nappies and wipes, hand me downs, free gear from my local MOPS groups, op shopping, etc. Put your younger kids in the clothes that their older siblings wore. Do free things with them and limit scheduled activities. Let them share a room. Enrol in public school. Buy second hand toys or utilise the toy library.
Spend more time with them, rather than taking them places or buying them things. They just want your full attention and love. Choose experiences that create wonderful memories together.
My toddler loves pushing a little trolley at Bunnings, exploring the creek and sitting out the front watching the rubbish truck come. We don’t have to make it complicated.
As they get older, limit their extracurricular sporting activities, musical tuition and hobbies. They don’t have to go to every single birthday party that they are invited to. Set a budget for presents and stick to it. Buy generic gifts on sale or clearance and put them aside in a gift cupboard. Don’t invite the whole class to a party, instead let your child pick a few choice friends. Alternate a party year with a sleepover year with one close friend. You choose how busy and expensive your children’s life will be.
Myth #5. I don’t need to worry about retirement yet.
It is a big money myth that you don’t need to worry about retirement yet. It’s never too early to plan for retirement. In fact, compound interest is your friend! Start contributing more per pay. Gradually increase this every year or whenever you receive a pay rise.
Put your tax return onto your retirement in a lump sum. If your partner is not working while they raise children, consider putting money into their superannuation every year to claim at tax time and to help them catch up.
Ensure that your family is protected in case you have an accident or health issue. There are 4 things you can do to sleep better at night.
If you can learn to live on a little less now, you can live on a little more later. I for one don’t want to end up retired and broke, worrying about money, unable to have independence or choices or travel. I plan to live in a paid off house, with plenty of super to draw on, and dividends from shares to access. Figure out how you want to live in the future and work backwards with what you need to do to make that happen.
Have you heard any of these statements before? Did you believe them?
I challenge you to dare to do things differently. Go against the grain of our spend now, worry later culture. Be responsible and wise with your money, reduce your spending and live within your means. Surround yourself with like minded people. Feed your mind the good stuff to stay on track. Set high goals and work hard to achieve them.
You’ll thank yourself later.